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Gold Buying Bounces on 18-Month Price Drop

GOLD BUYING among private investors rallied in June as prices fell hardest in over 18 months,
writes Adrian Ash at BullionVault.

Last Friday completed gold's worst monthly price drop since Donald Trump won the US presidential election in November 2016.

As gold prices fell 4.2% across the month in US Dollar terms, the number of investors selling the metal on BullionVault retreated 44.7% from May's number, while the number of people starting or adding to their gold holdings grew by 10.0%.

Together that drove the Gold Investor Index up from May's 9-month low of 52.4 to 2018's highest reading so far at 54.8, with the strongest month-on-month jump since September.

A unique measure of private-investor activity in physical bullion, the Gold Investor Index tracks behavior among the Western world's largest pool of private precious-metal investors. Now used by more than 72,000 people – primarily in Western Europe and North America – BullionVault is today caring for $2 billion of client bullion.

The index would read 50.0 if the number of buyers across the month matched the sellers' count exactly.

It has now moved opposite to the direction of month-average Dollar gold prices in 17 of the 20 months since Trump won the White House.

Private investors, in other words, remain cautious on gold as a group, buying when prices fall but pausing or taking profit when the metal rises.

This caution makes sense for as long as stock markets can weather the worsening political, debt and trade-war risks.

It also masks an underlying lack of interest in gold, with the tally of new investors buying bullion for the first time weakest since the bear market ending 2015.

The number of people buying gold and the other precious metals for the first time on BullionVault last month matched May's 4-year low.

Data from Google Trends say that the number of
internet searches for the phrase 'buy gold' was little changed in June from May's 11-year low, holding near the smallest volume since July 2007 – the eve of the global financial crisis.

Year-to-date, 2018 has now seen the number of first-time bullion investors fall by one quarter from the average 6-month period of the last half-decade, with new interest from the United States down 24.8%, from the UK down 34.6%, and from the Eurozone down 15.5%.

By weight however, BullionVault users grew their gold holdings by more than 52 kilograms as a group in June, taking their total holdings – vaulted in each client's choice of London, New York, Singapore, Toronto or Zurich – above 38.6 tonnes.

Client gold holdings set a new all-time high at 38.8 tonnes in March.

Silver demand was also positive by weight in June, with clients buying 5 tonnes net of their sales to set the 7th consecutive month-end record at 722 tonnes.

Like the number of silver sellers however – down 7.1% from May – the number of silver buyers also fell on BullionVault in June, slipping by 0.8% and nudging the Silver Investor Index from a near-balanced 50.6 only up to 50.9 for the month.

BullionVault users meantime bought more platinum by weight than gold, just over 56kg to set new record holdings at 0.6 tonnes of the metal, first offered in March 2017.

Here again, bargain-hunting rules. July's fresh plunge in
platinum prices, now down to 14-year lows in US Dollar terms, has brought out more buying already this week.

As for shaking the broader retail investing market out of its uninterest in precious, low prices look unlikely to work.

The vast bulk of savers and investors – following what passes for 'hot tips' from clickbait headlines – prefer to buy what is already going up.

Which here in summer 2018 is exactly what gold, silver and platinum aren't doing.

Adrian Ash is director of research at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News, RSS links are shown there.